The Fed is ready to start tapering in November. Since the markets were expecting this and it wasn’t a surprise, the USD slumped allowing risk-on currencies and gold to rally up.
USD starts the week with gains
- Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.
- As for the vaccine, European countries reported a delay in Pfizer’s vaccine deliveries. They are receiving significantly fewer doses of the Pfizer coronavirus vaccine than expected.
- US Core retail sales came out much worse than the forecast. Sales dropped by 1.4%, while the estimate was only -0.1%. It marked the third decline in a row.
- Unlike the US and EU, China encouraged investors with better-than-expected GDP and industrial output reports. Notably, China’s economy exceeded its pre-pandemic growth rates.
EUR/USD steeply plunged, but the support of the 50-day moving average in combination with the 61.8% Fibonacci level at 1.2070 stopped the pair. A short pullback to the upside is expected. If it finally manages to break this level, the way down to the key psychological mark of 1.2000 just above the 50.0% Fibo level will be open. Resistance levels are 1.2150 and 1.2200.
GBP/USD is edging lower towards the one-week low at 1.3500. The pair shouldn’t break it on the first try. However, if it moves below this level, the doors towards the lower trendline and the 50-day moving average at 1.3420 will be open.
Gold takes a break after a steep decline and moves sideways in the $1 825-1 865 range. The 50-period moving average has already crossed the 100-period MA and now it is approaching the 200-period MA to make the second dead cross. Therefore, we can assume that gold will fall further to the next support of $1 800, once it breaks below the support of $1 825.
Finally, let’s discuss the aussie. The risk-off sentiment pressed AUD/USD below 0.7700. The pair has already crossed two moving averages and isn’t likely to stop. If it drops below the low of January 4 at 0.7650, the way down to the psychological mark of 0.7600 will be clear. Resistance levels are 0.7740 and 0.7800.
Follow the speech of Bank of England's Governor Bailey at 15:30 MT time.
US Retail Sales will be out on October 15 at 15:30 MetaTrader time (GMT+3).
Australia will release employment change and an unemployment rate on Thursday, October 14, at 03:30 MT (GMT+3).
The US dollar is heading to close the seventh day in the red as it remains under selling pressure. The US data at 15:30 GMT+3 (jobless claims and Philly Fed Manufacturing Index) may support the greenback if it's strong.
Canada will publish the Retail Sales and Core Retail Sales on October 22, at 15:30 MT time (GMT+3).
The United States will release the weekly Unemployment Claims on October 21, at 15:30 MT time (GMT+3).